Person playing video games

How Canada is rising in global esports

May 11, 2021

How Canada is rising in global esports

Synopsis
5 Minute Read

As esports continues to rise in the entertainment industries, Canada plays a key role in its future.

Reece Hiland
Reece Hiland, CPA, CA
Partner, Assurance & Accounting

In the last several years, esports has moved from a niche community of passionate video game fans to a mainstream, billion-dollar industry. Total esports viewership from around the world is expected to reach 646 million by 2023, and the market could surpass $1.5 billion at this time.

It’s a major global movement, and one in which Canada has been holding its own in several major titles in recent years. In 2017, Team Canada snagged second place in the Overwatch World Cup. And, in 2018, Canadian Sasha ”Scarlett” Hostyn earned a historic win at the IEM championship in Pyeongchang, becoming the first woman to win a major StarCraft 2 championship.

Today, several Canadian teams and organizations represent Canada on the world stage. Toronto Defiant and Vancouver Titans are part of the global Overwatch League and their esports organizations, OverActive Media and Luminosity Gaming, respectively, are considered leading global esports organizations.

While this industry is investing millions of dollars towards events, publicity and talent, it took a lot of work to get to this point. We explore Canada’s esports rise with some early pioneers and industry experts to find out what brought Canada to this point, and what’s next.

Setting the foundation

Before esports was even a term, Wim Stocks was leading digital entertainment through his work as executive vice-president of Atari in the early 2000s. He then launched his own online game publishing company, called Elephant Entertainment, which was acquired by THQ.

In 2010, Virgin Gaming (now WorldGaming) recruited him to their executive management division, and in 2016 he was named as its CEO. They were both acquired by Cineplex in the fall 2015, before they were purchased by PlayFly sports in July of 2020.

“It was very nomadic. There weren't leagues that had franchises in cities,” Stocks said of the early days of Canadian esports. He gives the example of the U.S.-based Immortals team founded in 2015, which would have multiple teams working under their banner.

“There'd be a tournament in Germany, they’d pick up and fly there. Three weeks later, they’d announce a tournament in Poland, and they’d pick up and fly there. There was no league structure.”

This model worked for esports fans willing to travel for their favourite teams, but it didn’t resemble traditional sports, making it tough to get mainstream appeal, says Stocks. Only once franchises started taking shape — the first Overwatch League launched in 2016 — did it start having broader appeal.

“People would say, ‘okay, now I get it, I might not understand Overwatch, but I see a structure that looks an awful lot like the NHL or Major League Baseball’,” says Stocks.

And it’s getting a similar type of infrastructure investment. In February 2021, OverActive Media announced it would build a $500 million, 7,000-seat esports venue in Toronto. For CEO and president Chris Overholt, it’s an investment in the overall entertainment scene in Toronto, providing more venue options for booking performances, for example.

“There is and has been a market gap in the city of Toronto around the opportunity for premium entertainment acts that land in the city,” says Overholt. “Toronto is a great market for entertainment, and has been for a long time.”

Vancouver and Toronto lead the way — so far

With several major organizations operating in Toronto and Vancouver, these cities have a particularly high profile in the global esports scene. These include OverActive Media and Luminosity Gaming, both based in Toronto. Luminosity has grown to one of the largest globally recognized esports organizations and has teams competing in Call of Duty, Overwatch, Tom Clancy's Rainbow Six: Siege, Super Smash Bros., Fortnite, and Apex Legends. Luminosity also has high-profile contracts with streamers like Ninja, who has the most-followed Twitch channel at the time of writing.

The pro scene in the Canadian esports scene is very active between Vancouver and Toronto. They’re leading the way to big esports team franchises that now have multiple teams under their umbrellas,” says Stocks.

Vancouver is currently the only region in Canada that has a dedicated esports strategy to position it as an esports hub. Shawn Caldera, esports strategist at the Vancouver Economic Commission, says that Vancouver has many of the right pieces to be an esports hub.

“Vancouver’s had all the right pieces for a long time, from publishers being active in the esports space, from local schools and colleges and universities that have esports teams and clubs in which admin and faculty are now starting to notice,” he says. “We have amazing small businesses which are revolutionary leaders in their own right and different parts of the esports economy, whether it be platforms, tournament organizers, event production media or journalism.”

Caldera notes that Vancouver can use geography to its advantage. He says there are exciting things the Commission is working on “pertaining to events and player immigration post-COVID.”

Infrastructure challenges

For Canada to take full advantage of its esports talent, it does need to invest in infrastructure other than venues — Caldera notes that equitable internet access is one need, and an investment that would translate to supporting other areas like online education.

At the same time, Canada will need more “activations” at the local level similar to traditional sports, where young players can foster their talent and potentially go professional, says Stocks. “That's what's missing in esports. Even in high school, they don't have hubs for them to go play. They put a couple of computers together, but they don't have funding, the mandate, or the infrastructure.”

The ecosystem is emerging and the Canadian esports scene has time to carve out a lucrative model that works, especially as esports becomes more tied to traditional sports. For example, OverActive just completed a $40 million raise that saw the National Hockey League’s Montreal Canadiens and hockey players Phil Kessel and Carl Hagelin join OverActive’s ownership group. Overholt says OverActive’s model is to acquire franchises up front, and then enjoy the revenue-share that is central to the business model of these leagues. “The revenue that these leagues drive around media rights and broadcast partnerships and marketing partnerships and licensing is the key to our business model.”

He suggests this model is a part of OverActive’s success. “We believe that the most sustainable position in global esports today is to be sitting inside the enterprise growth of these leagues, and to have the opportunity to share in those revenues.”

As esports continues to grow, Canada is poised to see big benefits, especially as video games continue to be a leading entertainment source for the next generation.

“It is fair to imagine that we will see tremendous growth in this industry, especially as the millennials and the Gen Z's define for themselves what their sport, media and entertainment choices will be,” says Overholt.

Contact

To learn more about the esports industry, contact:

Reece Hiland
Partner, Assurance & Accounting

647.943.4048
[email protected]

David Campbell
Senior Manager, Technology, Media, and Telecommunications
647.480.8437
[email protected]

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